We’re Going to Hell and Still Can’t do Math – Minimum Wage, Poverty Wage and Living Wage in Oregon

Elleanor Chin

A few months ago I wrote about “middle class” policy objectives. “Middle class” is a vague concept but is generally understood to include some financial security, home ownership, and perhaps the ability to go on vacation. So what would it take to give people in this country and this state a fair shot at the absolute basics: feeding our children, keeping a roof over our heads and maybe growing old with basic human dignity?

I did some quick math to check how badly the deck is stacked and it’s ugly. Let’s start with one of the most basic building blocks of economic survival: wages. As of January 1, 2015 minimum wage in Oregon is $9.25 an hour (Federal is $7.25). Working forty hours a week, that is $370 a week and roughly $1480 a month. If one works fifty weeks in a year (with the remaining two weeks being unpaid sick time, unpaid holidays and unpaid vacation combined) that is 2000 working hours. At $9.25 that is $18,500 in a year. Federal poverty level (the base line for calculating eligibility for programs such as Medicaid, housing assistance and so forth) for a family of four is $23,850.

Last year OPB covered the struggles of the working poor in Oregon to make ends meet and find housing. To cut to the chase, a full-time minimum wage job in Oregon does not make enough money to pay rent. It also doesn’t make enough money to pay for food, particularly if one must also pay for rent. Calculating eligibility for SNAP (“food stamps”) is done based on an income and housing cost formula. Assuming a full time minimum wage job and $1000 monthly rent, no utilities except phone and no additional costs or income, a family of four is eligible for roughly $497 per month in food stamps. $1000/month is not enough to get a two bedroom apartment in the Portland area, but is higher than the monthly estimated state wide average. If one pays rent of $1000 (with all utilities included), one has $480 per month left to spend on every single other expense a person has. For a family of four that’s four dollars a day per person. (Not counting food, because there’s the $497 in food stamps. Yay.)

Four dollars per day to cover telephone, transportation (either mass transit or car/gas), clothing, school supplies and any emergency what so ever. We’ll assume this family of four gets Medicaid. But childcare is inconceivable in this scenario (particularly in Oregon) and certainly there are no entertainment or similar expenses. A single carton of Target store-brand diapers costs $37.99. The average price of a gallon of milk is nearly $4.

Just for grins, try another scenario: Two wage earners earning $9.25, working full time, two kids who are old enough to be in school, but who still need some childcare. Rent costs of $1100 (which still doesn’t buy much in Portland), which includes heat but no other utilities. Just plugging in $300/month in child care cost (which would barely cover a little afterschool care), one is still eligible for $224 in food assistance. That leaves $13 per person per day to cover gas, school supplies, clothing, utilities, phone and substantial food costs.

As a Policy Matter We Have Apparently Decided Starvation is Okay

Think now about how surreal this scenario is. Oregon does not require that people working full time make enough to avoid starving or being homeless. (Whether people who receive food assistance can avoid starving either is an open question). Consider some more details.

Oregon minimum wage went up $0.15 at the beginning of this month. BOLI announced the 2015 “upward adjustment” in September. So last year, Oregon allowed people to earn $300 less per year. There is no realistic budget for any of life’s necessities in these quick calculations (done using the Oregon DHS food stamp calculator). A monthly TriMet pass for an adult costs $100. At one time it appears that Corvallis offered a nominal fare for people with Oregon Trail cards. There does not appear to be a system where if one qualifies for SNAP, one simply gets a bus pass. (Note that even having a public transportation infrastructure is a luxury).

Major, but normal, financial fluctuations take the situation from impossible to catastrophic. For example, having a preschool age child. Or just having unpaid parking tickets.

All of this is why low wage work actually costs Oregon money. Paying people inadequately costs money. It costs tax dollars in the form of housing subsidies, food aid and Medicaid. It costs in terms of lost economic activity and it costs in the long term because of lost potential from a more productive, healthy, stable workforce.

Consider now the minimum wage discussions in this country. Seattle’s “highest in the country” minimum wage of $15 hour won’t go fully into effect until 2021, at which point its value compared to inflation is open to question. If it went into effect today, it would be worth $30,000, which is about 130% of poverty level for a family of 4.

According to the MIT living wage calculator, the living wage for a family of four (2 adults working 2080 hours a year, not 2000) is $19.76 an hour for Portland. In Riddle or Baker County it is closer to $18 an hour. Why didn’t I skip the whole first part of this discussion and just bust out the living wage calculator? Because the raw conclusion as a whole isn’t sinking in anywhere.

The reality and the vision of America as a middle-class country are eroding, but worse than that, we have no plan or policy to just keep people from starving. If we are patting ourselves on the back for raising the wage to $15 an hour in an expensive urban area (that's if it survives court challenge), we apparently don’t even have the frame of reference to detect the problem. Americans are becoming poorer, hungrier and sicker (and less educated). We can figure out how to solve the problem (assuming we can do math), but if we don’t, we will all pay the price.

By Elleanor Chin Jan. 20, 2015